Office Products Inc. manufactures and sells various high-tech office automation products. Two divisions of Office products Inc. are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division: Selling price per chip Variable cost per chip Fixed production cost Fixed SG & A costs Monthly capacity External sales Internal sales $50 $20 $60,000 $90,000 $50 $45 $20 10,000 chips 6,000 chips 0 chips Presently the Computer Division purchases no chips from the Computer Chip Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each month. Assume that next month's costs and levels of operation in the Computer and the Computer Chip Divisions are similar to this month. What is the minimum of the transfer price range for a possible transfer of the super chip from one division to the other?

Office Products Inc. manufactures and sells various high-tech office automation products. Two divisions of Office products Inc. are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division: Selling price per chip Variable cost per chip Fixed production cost Fixed SG & A costs Monthly capacity External sales Internal sales $50 $20 $60,000 $90,000 $50 $45 $20 10,000 chips 6,000 chips 0 chips Presently the Computer Division purchases no chips from the Computer Chip Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each month. Assume that next month's costs and levels of operation in the Computer and the Computer Chip Divisions are similar to this month. What is the minimum of the transfer price range for a possible transfer of the super chip from one division to the other?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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